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Tuesday, April 17, 2012

ABA, Trades Say CFPB Should Write Workable Mortgage Rules

Yesterday, ABA and eight financial trades filed a comment letter with the Consumer Financial Protection Bureau regarding the ongoing efforts to combine mortgage disclosures under the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA). ABA’s encourage the CFPB to agency strive to achieve workable and efficient rules that will guide mortgage shoppers for the next generation. The new regulations must achieve “a solid and clear regulatory system,” and CFPB must carefully analyze the impact of these proposals and industry’s concerns with the framework under consideration by the rulewriters.

ABA reminded CFPB that this rulemaking is of considerable scope and must therefore provide ample time for training, systems development and the myriad operational changes that the rule will bring about. ABA also reminded CFPB that the Dodd-Frank Act mandates focus on integrating the disclosures under the RESPA and TILA laws, and any upcoming proposals must not, therefore, stray from these existing and well-delineated statutory frameworks.

The comment letter points out several concerns:
  • The need for careful synchronization with other rulemaking efforts, especially QM and QRM
  • The negative and unfair results that would flow from a lowering of cost tolerances
  • The negative consequences that result from revisions to the definition of “application”
  • The unintended consequences resulting from expanding the definition of “APR”
  • The burdens associated with requiring final settlement disclosures days in advance of closing

The Bureau is expected to issue formal RESPA-TILA regulatory proposals in July 2012.

Read the letter.

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